UBS Asset Management has introduced a new ETF in Europe providing US large-cap equities exposure with a net-zero overlay and an improvement of the overall ESG profile.
The ETF is the first in Europe to track a Climate Transition index based on the S&P 500.
The UBS ETF S&P 500 Climate Transition ESG UCITS ETF has been listed on SIX Swiss Exchange in US dollars (Ticker: CT500 SW) as well as on Xetra and London Stock Exchange through euro-hedged (BCFG GY) and sterling-hedged (CT5G LN) share classes, respectively.
The fund represents the first ETF in Europe to track a ‘Climate Transition’ index based on the S&P 500, selecting and weighting its constituents to be collectively compatible with the transition to a low-carbon and climate-resilient economy.
The underlying S&P 500 Climate Transition Base ESG Index first screens the S&P 500 universe to remove proven violators of UN Global Compact principles as well as companies that exceed revenue thresholds in controversial sectors such as weapons, tobacco, thermal coal, and oil & tar sands.
The remaining constituents are then weighted using an optimization process that delivers an immediate 30% reduction in overall carbon intensity (based on Scope 1 and Scope 2 emissions) followed by a 7% year-on-year reduction trajectory.
The optimization also seeks to achieve secondary objectives such as a 20% boost to companies with clear science-based carbon reduction targets, an improvement in the green-to-brown revenue ratio, greater exposure to ‘Green’ sectors, and a 20% increase in the overall ESG score.
The index further aims to limit tracking error relative to the S&P 500 by minimizing the active share of sectors, industries, and constituents.
The ETF comes with an expense ratio of 0.07% for its non-hedged share class and 0.10% for its currency-hedged share classes.
It is classified as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).